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Decision to close GM facility a blow to economy, most say

Rochester Business Journal
October 12, 2012

Four out of five respondents to this week’s RBJ Daily Report Snap Poll say General Motors Co.’s announcement last week that it will move its hydrogen fuel-cell research operation from Honeoye Falls to Pontiac, Mich., is a significant blow to the area’s economy.

Most of the 220 people who work at the local facility will be offered jobs in Michigan, GM said.
The automaker cited business advantages in bringing its fuel-cell research and engineering operations together in one location, along with cost advantages. GM’s lease at the Honeoye Falls facility expires in early 2013.

The presence of GM’s fuel-cell research facility has helped Greater Rochester Enterprise and others market this region as a leading energy innovation center. Delphi continues to work on fuel-cell R&D here, and other firms are involved in solar and wind energy, biofuels and energy storage technology.

Readers were split on the outlook now for Rochester as an energy innovation center, with 52 percent saying it’s promising, compared with 48 percent who said it doesn’t look good.

Roughly 575 readers participated in this week’s poll, which was conducted Oct 8 and 9.

Is the GM fuel-cell facility closing a big blow to the local economy?
Yes: 81%
No: 19%

In your view, how promising is the outlook now for Rochester as an energy innovation center?
Very promising: 8% 
Somewhat promising: 44% 
Not very promising:  42% 
Not at all promising: 6% 

COMMENTS:

The loss of jobs is a big deal, and a big blow to Rochester.
—Natalie Summers

Yet again, massive tax breaks and corporate welfare have resulted in a business betraying the very community that has been supporting it.
—Chris Juby

So much for all the “taxpayer” funding that went into this facility—somehow, this fact does not get any “press.” We need to allow companies to rise or fall on their own merits, not pumped up through artificial government money, at the taxpayers’ expense.
—D.H. Hudson, principal engineer, FEM&A Inc.

With all of the environmental problems caused by legacy businesses such as Kodak, we should have enough talent to figure out how to clean up hazardous waste sites (and create services business from that knowledge) and possibly invent new ways of creating clean energy from otherwise toxic waste. Question is: Does the investment community have the risk appetite for such ventures?
—Rick Skanron

There are two aspects to fuel-cell technology. One is development of the equipment utilizing hydrogen, and the other is the development of efficient processes to separate hydrogen from other material (i.e., water or natural gas). Rochester has a large legacy in chemical manufacturing (think Kodak). Now we need to redirect our efforts to manufacturing and distributing hydrogen plus continue to promote our high-tech manufacturing capability. The manufacturing and use of hydrogen fuel plus equipment utilizing hydrogen is a whole new industry that would allow Rochester to demonstrate its technological leadership. I don’t think that Honeoye Falls was a good location for the technology center in the first place. The facility was intellectually isolated.
—Doug Flood

A personal friend of mine who retired from GM told me that friends within GM had told him that the idea was never going to work. However, as long as the government gave them money to keep it going, they would keep looking for the yet-to-be-discovered technology. I guess I’d rather have them waste resources in my district than someone else’s. Still, it was a waste.
—Bill Lanigan

Where are Sens. Charles Schumer and Kirsten Gillibrand when we need them most? They both voted to bail out GM, and now we get left high and dry? And where was Gov. Cuomo, with all of his high-level Washington connections? Who cares about gay marriage and health care ... we need jobs folks! And it seems to me we need new senators representing our state, too!
—George Thomas, Ogden

Loss of the polymer expertise from Kodak may be significant to this industry. Eastman Business Park is a very bright spot for the future of energy devices on coated webs or flexible glass. Our optics capability throughout the region and flexible glass technology will allow collectors to be placed in vehicles, clothes, etc. Sweetwater Energy brings yet another bright venture to this area of need.
—E. Jones

A reminder to the governor on down—especially to our local representatives—about how critical it is to improve the business climate in this state.
—Keith Newcomer

Anytime you lose a manufacturing company from our community, it is a big blow. Besides the loss of jobs, we also lose a high-tech industry with a promising product. That alone could have opened up the doors to even more jobs in the future for our area. Additionally it is industries like the GM plant that help to attract young people to manufacturing and retain many of the college grads in our community instead of losing them to other states. Albany still has a lot of work to do to make our state more attractive for companies to want to move or expand their manufacturing facilities here. Rochester and surrounding communities have a lot to offer companies like GM, but they can’t do it by themselves without more help from Albany.
—Grant Osman

I wonder if New York was a battleground state if GM would have closed this plant.
—Bill Shelly

We’ll be a true “energy innovation center” when we begin extracting the affordable energy beneath our feet.
—Steve Wichtowski

While Rochester is gaining new jobs, very few of those jobs are in non-medical engineering and science. We are gaining lots of call center and tech support jobs, but those jobs are far below (in terms of salary, challenge, and impact on the local economy) many of the jobs that have been lost. The closure of the fuel cell facility will not have a big impact on clean energy in Rochester, as fuel cells really aren’t clean (a huge amount of energy goes into the creation of practical hydrogen fuel) and the promise for mass market applications was overhyped. We do need to focus more on other clean-energy opportunities such as our transit industry supplies, battery research and production, and thin-film solar cells.
—DeWain Feller

The closing of this facility is just the beginning of the hard times that will face GM in the next few years. A situation that could have been prevented had they not taken the Troubled Asset Relief Program money. As far as energy innovation goes, not Rochester nor any city will be the "energy innovation center." Energy innovation as it is being subsidized today is a farce. Wind, solar and fuel-cell technology do not show the promise that their government-sponsored sugar daddies proclaim. They are not even close to commercially viable without huge subsidies and tax breaks. The real salvation for energy independence for the next 200 years will be nuclear power and natural gas. Both are being legislated out of existence by stupid political leaders and people-hating neo-enviro-fascists.
—David Schuler

Where are our representatives? Why were they blindsided, too? Schumer was here when things were fresh. Former Sen. Clinton boasted of her role. Maybe Rep. Slaughter has not read the paper yet. Upstate New York continues to receive the back of the hand from this administration. GM, Sikorsky—jobs lost in New York, and where are our representatives?
—Bob Miglioratti

The lost jobs represents millions in lost wages to the area and the money these households would have spent to meet their needs. It is a state-of-the-art facility that needs to be marketed and sold to another suitor who can add back these jobs. Is it worth a tax break, or PILOT? You bet it is!
—Rich Mileo

It certainly is a big blow to the economy of Honeoye Falls. I would not say that it is a big blow to the local economy. Disappointment, yes; big blow, no. I'd rather be asking why GM made the decision and what the local economy and government and GRE can do so that the next one doesn't leave.
—Jay Birnbaum

The alternative fuel business has always relied on government grants to prop it up; there is no underlying business or consumer support for fuel cells, battery-powered vehicles, etc., especially when we have plenty of conventional fuel available if only we will drill for it. Although I feel sorry for the 200 employees who will lose their jobs, the fact is they were working in a business that was simply not viable. It will be wound-down in Detroit and eventually abandoned.
—Bob Sarbane

Of course losing the GM presence in Honeoye will be a huge negative. Where are Chuck and Louise when you need them? How about Andy? Corporations are fleeing New York State like it's on fire! I bet everyone reading this could mention several wealthy people that have relocated out of New York State because of taxes. When all that is discussed are innovative ways to raise revenues (confiscate tax dollars) and pander to unions, the wealth generators flee to greener pastures. Amazing what common sense and logic could figure out! Public pay, pensions, double dipping (lieutenant governor), unions, is the working side of it. Welfare, social services, housing, food stamps, healthcare, schools with free breakfast and lunch (plus food stamps), is the liberal end of it. Totally unsustainable currently and to be even more unsustainable as more good employers leave NYS. Imagine depending on those innovative, productive, union backed, OWS people to sustain this mess and create an environment that attracts business. Yes I can!
—Lou Romano 

The concern I have is for the local Honeoye Falls economy. As a neighboring business in Honeoye Falls, I see firsthand the impact the GM facility has on the village. Over the past few years, new condos and apartments were built within walking distance to the facility and have been inhabited by these employees. Also, new restaurants have come to the village in order to cater the walking employees at lunchtime. As GM pulls out of the village, I am concerned about the vacancies that could arise. Hopefully the facility can be utilized by another company that can bring jobs back to the area.
—Pete Deckman, Deckman Oil Co.

This was a bright spot on the horizon. I do not understand the decision to terminate all activity in this area!
—JA DePaolis, Penfield

Do we really need to answer this question? Of course it's a big blow. Who in the local economy is adding 220 jobs?
—Jerel Patrick

When it comes right down to it, Rochester is missing the following key factors for innovation: 1) Adequate available capital; most of the innovative companies that have been funded did so by going out of our region. The local capital community is very conservative. 2) A cooperative attitude towards innovation; every constituency wants to take credit for any innovation, thus instead of working together we have county, city, each academic institution and each large company competing with each other for credit, facilities and dollars. 3) A tax-friendly attitude for innovation. New York State is a hard enough tax environment as it is. When the county plays games like demanding that people building on leased county property pay union wages, COMIDA gives money and low-cost loans to athletic facilities instead of startups, the city has a regressive property tax policy that keeps startups out of the city real estate market, and the high cost of employment in general in the city. 4) A vibrant and coordinated social mentoring system, because we lose new entrepreneurs out of the area due to their funding being elsewhere we suffer from the same problems that we do by not retaining young college talent in Rochester. No young successful startup mentors, and those who are here have little time to mentor others. 5) An innovation and entrepreneurship guiding force: Places like Boulder, Colo., have Brad Feld, an investor and an entrepreneurial evangelist, spreading the word about how great a place Boulder is for innovation. We should model our entrepreneurship program off of Brad's TechStars program, and the area should recruit someone to head up and push that agenda forward—getting everyone on the same page with the same goal—growing Rochester.
—Lee Drake, CEO, OS-Cubed Inc.

Strip them down using government-backed contract supplier. Make them scared, then sell them on tracking. Not fair! Big business and our government all collude for the corporate giants and the shareholders. They forget that which butters their bread.
—Carol A. Houle, President/WBE AGS Inc.

Still many good things going on in region. RIT and UR should scoop these employees up and grow their research.
—Joe Dattilo

Psychologically it’s a big setback. These are 220 high paying jobs and at the same time New York State recently again was ranked as the nation’s worst business climate. I don’t think it’s a coincidence. There is definitely some correlation. However, GM is starting to falter again and still owes the tax payers and others tens of billions of dollars which will never be paid back. In addition, President Obama disrupted the orderly bankruptcy process and negated the secured bond holders’ position in the amount of $20+ billion. Canadian taxpayers also took a big hit in the amount of billions of dollars. Yet Big Labor was given billions as part of President Obama’s payback for their support in his 2008 election success. Also, there were many other subsidies directly and indirectly which was a drain on the tax payers such as “cash for clunkers.” GM continues to be propped up but is starting to slip again. President Obama should have let the original bankruptcy reorganization play out. In the long run, it would have been better for GM, better for the taxpayers and better for America. In spite of this, I will continue to buy GM cars like I have over past 40 years. Call me crazy!
—John Rynne, president, Rynne, Murphy & Associates Inc.

10/12/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


What You're Saying 

David Rea at 9:44:13 AM on 10/12/2012
I feel compelled to refute Bill Lanigan's comment above: "A personal friend of mine who retired from GM told me that friends within GM had told him that the idea was never going to work."

While someone may have said this to Bill at some point, the message is absolutel...  Read More >

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